Internal economies of scale occur when the cost per unit of output depends on the size of a firm. By operating on a larger scale, a business can reduce its average costs of production.
Posts published in “BUSINESS GROWTH”
Economies of scale mean reductions in a firm’s unit cost of production, or the Average Cost (AC) as the business grows increasing in size.
The term scale of operations simply means the size of business operations measured by the business's maximum output.
Expanding the business has many benefits for the owners. Let’s take a look at the most important reasons why the owners may want to grow their businesses.